January 22, 2020
Volume 3 Issue 8
Calumet Plans Lubricants Business Growth
Calumet Specialty Products Partners will undertake a slew of initiatives to lift its lubricating oils and finished lubricants business as part of an overall strategy to bolster the company’s profitability this year, it announced on Tuesday.
Phase II of what it calls its “Self-Help” program, which began at the start of 2019, will focus on growth in its specialty products segment. "In 2020, we are prioritizing a number of strategic growth initiatives designed to accelerate our transformation, specifically in the lubricating oils and finished lubricants businesses,” said Tim Go, CEO of Calumet, in a press release issued Jan. 21.
The Self-Help program was launched in 2016 with the goal of improving the company’s earnings before interest, taxes, depreciation and amortization, which can help measure a company’s profitability. Calumet said Phase I of the program accomplished a $182 million increase in its adjusted earnings before interest, taxes, depreciation and amortization from 2016 to 2018.
The company expects Phase II of the program to deliver a $100 million increase in its adjusted EBITDA from 2019 through 2021, and said that 2019 contributed $30 million toward that goal. “We believe these collective efforts and a stronger cultural focus on driving organic growth can help us deliver approximately $20 million of incremental adjusted EBITDA in 2020,” said Go.
The efforts include a debottlenecking project at its Princeton, Louisiana, base oil refinery to be completed in the first quarter of 2020 and a similar project at its Shreveport, Louisiana, base oil refinery, which was completed in late 2019.
The Princeton facility has capacity to make 6,900 barrels per day of naphthenic base stocks, while the Shreveport facility has capacity to make 11,900 b/d, the majority of which is API Group II, though it can also produce Group I, Group III and naphthenic base stocks, according to Lubes’n’Greases’ 2019 Guide to Global Base Oil Refining.
Additional debottlenecking projects aim to “meet increased demand for engineered fuels and [capture] packaging line cost efficiencies.”
"We plan to continue driving specialty products growth, as well as improving our transportation, logistics and procurement costs,” Go said.
Indianapolis-based Calumet did not respond to questions about the program and how the projects have impacted its lubricants and base oil businesses.